Memorandum by the Assistant Secretary of State (Messersmith)

The Soviet Ambassador4 came to see me on December 29 and said that he understood that I had to do with our foreign buildings program. We had acquired in Moscow, through the cooperation of the Soviet Government, some years ago, a plot of ground very favorably and suitably located for the erection of a combined office building of Our Government. The site was one of the best in the city. He knew it very well and could say that it was unquestionably one of the best building sites for this purpose in Moscow. It was so considered also by his Government and by other diplomatic missions there.

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The Ambassador continued that we had apparently made plans to build a building but had abandoned them as no progress had been made for some time. The Soviet Government was very much interested in knowing whether we had any plans to do anything in the near future; it was too good a piece of ground to lie idle, and he intimated that if we did not use it the Soviet Government would be very glad to have it for the erection of a building for its own purposes. He also said they were somewhat embarrassed as several other missions, knowing that we were not doing anything, were expressing an interest in acquiring this property and his Government was at a loss to know what to reply.

In résumé, he was interested in knowing whether we were planning to proceed with building on this plot in the near future, and if in case not, we were prepared to let the site go.

I replied to the Ambassador that the fact that I could not give him very definite information would perhaps indicate to him in itself that the Moscow project was for us at present an inactive one. This I said, however, was due, I believed, to no fault of our own. I had come into the Department in July of this year, and I had given little study to the Moscow project as I understood that we had not been able to make any progress on it due to difficulties which seemed to come wholly from the Soviet authorities. We had become interested in this site in good faith, and an adequate sum out of moneys appropriated by Congress for the foreign buildings program had been allocated for the Moscow project. When we tried to proceed, my understanding was that the Soviet Government made so many difficulties of a technical and other character with respect to actual building operations and materials that our Government had been forced to give up all thought of the project for the present. I was not able to speak more definitely than that I said, as for the foregoing reason the project was not an active one and I had been giving my attention to those projects on which we could make progress. I would be very glad, however, to go into the matter and give him as soon as I could as definite information concerning our intentions as was possible. The Ambassador said that he would be glad to have any information concerning our plans for the Moscow building which we could give him.

I then said to the Ambassador that in an entirely personal way and in no sense speaking officially I could give him a little background which might be interesting to him. I said that our interest in the Moscow project was also somewhat lessened by the fact that our general plans for the Moscow establishment might have to undergo some revision. The reports which we got from our people in Moscow were quite discouraging in the sense that the Soviet authorities placed so many obstacles in their way. It was very difficult for them to have [Page 455]the usual contacts that the officers of our Government have in capitals. All sorts of difficulties seemed to be put in their way. This obliged us to consider how useful our establishment there was, and whether our present establishment was not too large under the circumstances.

There was, for example, the question of difficulty in getting rubles at a reasonable price. Under an act of Congress the President could issue an Executive order fixing a rate of exchange for various currencies, and we had just been obliged to ask the President to fix a new rate of exchange for the ruble. The rate which we had to fix was so high that it made the cost of our salaries and maintenance in Moscow exceedingly burdensome and all out of proportion with the cost of similar establishments in other capitals. There was, I understood, an understanding with the Soviet Government which had indicated that it would not object to our buying rubles in Paris or elsewhere, and that we had been able to get rubles in a few cities at a more reasonable rate than in Moscow. The Soviet Government, however, was apparently controlling the supply of rubles outside so definitely that the price had gone up so much that they cost practically the same in other cities now as in Moscow. In any event, the exchange allowance which we had to make to our officers was so high, and our maintenance expenses generally were so high, that the cost of our Moscow establishment was a great burden and we were under the necessity of considering reducing it.

I observed to the Ambassador that I never could quite understand why the Soviet Government, realizing this situation, did not make it possible for our and other missions to get what rubles they needed for official purposes at a reasonable rate. If the Soviet Government wanted these missions there, which I assumed it did, and I certainly assumed that they wanted ours, it would only seem a friendly gesture under the known circumstances to make rubles available at a reasonable rate. The situation had become so bad recently that we had a telegram from our Chargé d’Affaires saying that many of our officers had been obliged to borrow money to supplement their salaries in order to get sufficient rubles to cover their living costs.

The Ambassador said that he did not know much about this situation, but had been under the impression that some solution had been reached. He was glad that I had told him about it and he would take it up with his Government to see what could be done.

I said since we were on this subject and as these matters were all more or less related to the building project, I could further inform him, again personally and unofficially, that there were quite a number of things which concerned us about our Moscow establishment. These were so numerous and serious that I understood it had been the Secretary’s intention to bring them to his (the Ambassador’s) attention recently but that the Secretary had been prevented from doing [Page 456]so by the pressure of recent events. We had, for example, had a telegram recently from our Chargé d’Affaires to the effect that our officers on being transferred had to send all their effects to the customhouse where they were opened and kept some times for days. Obviously there was great danger, under the best circumstances, for articles to be lost, stolen, or mislaid. It was a most unusual practice of a government to submit the officers of a friendly government to such a control, and it opened our Government to all sorts of claims from officers for articles which might be lost in some way through this control in the Soviet customs. The Ambassador expressed great surprise and said this was the first he had had [heard?] of such a regulation. He asked whether it applied to our diplomatic officers. I said that I understood it applied to all of our officers. I gathered the impression that he could hardly believe that such a regulation had been issued. His manner showed that he realized how serious this was. I told him that just as our officers were not permitted to make illegal exchange transactions and we would not tolerate anything of that kind, just so our officers would not engage in smuggling operations. Such controls, therefore, were extremely objectionable. I said that I assumed this question of ruble purchases and customs control were among the rather considerable number of things which the Secretary had contemplated taking up with him.

I remarked to the Ambassador that he would quite appreciate that with our officers experiencing all these difficulties it put a somewhat different complexion on our building project and plans in Moscow. The Ambassador offered very little comment beyond saying that he would take up the two specific things which I had mentioned with his Government. He seemed to be deeply interested in what I told him concerning the difficulties our officers experienced, and by his questions rather than by any comment indicated a certain amount of surprise, the genuineness of which I am not able to judge.

G. S. Messersmith
  1. Alexander Antonovich Troyanovsky.